Wal-Mart down after missing sales forecast

Wal-Mart Stores Inc., the largest retailer, fell the most in nine months in New York trading after posting a seventh straight sales decline at its U.S. stores, short of its own projections for the holiday period.

The shares fell as much as 4.4 percent after Wal-Mart said today that sales at U.S. stores open at least a year fell 1.8 percent in the quarter ended Jan. 28. Chief Executive Officer Mike Duke said in October that U.S. comparable sales would be “positive.”

Duke, 61, said Wal-Mart is “disappointed” by the results and that it will take time to revive Wal-Mart store sales in the U.S., which account for almost two-thirds of total revenue. The CEO put thousands of products back on shelves, offered $5 Barbie dolls to holiday shoppers, and began focusing on smaller stores to lure back U.S. consumers living paycheck to paycheck.

“There’s finally a sense of reality at Wal-Mart that the U.S. is going to take longer to turn around,” David Strasser, an analyst at Janney Montgomery Scott in New York, said today in an interview. “Some of the problems are self-inflicted. Their customer is still very much in a recession/depression.”

Net income in the fourth quarter rose 27 percent to $6.06 billion, or $1.70 a share, from $4.76 billion, or $1.25, a year earlier. Profit from continuing operations, excluding a tax benefit, was $1.34, compared with the average analyst projection of $1.31. Wal-Mart forecast full-year profit of $4.35 to $4.50 a share, compared with the average analyst estimate of $4.44.

Wal-Mart, based in Bentonville, Arkansas, fell $1.95, or 3.5 percent, to $53.43 at 11:02 a.m. in New York Stock Exchange composite trading. Earlier the stock slid as low as $52.95, the largest drop since May 6.

Duke’s Overhaul
Strasser, who has a “buy” rating on Wal-Mart shares, foresees improvement under U.S. stores chief Bill Simon, who replaced Eduardo Castro-Wright in June. Duke has overhauled his management team since taking the helm in February 2009. Last month, Wal-Mart named Duncan Mac Naughton chief merchandising officer, replacing John Fleming, who left in August. Charles Holley succeeded Tom Schoewe as chief financial officer Nov. 30.

“Many of the fourth-quarter problems stemmed from merchandise assortment and presentation issues that contributed to customer traffic declines,” Duke said in a pre-recorded call for analysts. "There is no greater priority’’ than improving U.S. sales.

The pace of job growth, rising gas prices, and Americans’ drive to pay down debt have some shoppers tightening their budgets, posing hurdles for discount retailers.

Unemployment
More Americans than projected filed first-time claims for unemployment insurance in the week ended Feb. 12, a sign improvements in the labor market will take time. Gas prices, averaged nationwide, have increased 21 percent over the past year, the AAA said Feb. 18 on its website.

The retailer predicted the movement in first-quarter fiscal 2012 comparable-store sales in the U.S. would be between a 2 percent drop and little change.

First-quarter profit will be 91 cents to 96 cents a share, Wal-Mart said. Analysts on average anticipate 96 cents.

Total revenue in the fourth quarter advanced 2.4 percent to $116.4 billion. Sales abroad rose 6.6 percent on a constant currency basis, led by Brazil, Mexico and China.